Monday, November 17, 2008

Being General Motors II

I wrote a post Being General Motors nearly two weeks ago. There seems to be more pressing reasons for a bailout. But when will it end? This year $25 billion is needed. Next year $100 billion may be needed. Being in Michigan, a state already struggling, I well understand the necessity of GM here and even beyond state borders.

Here are some general questions:

1. Can we sustain a loss of 3 million jobs?
2. Can we continue to borrow money, increasing the deficit?
3. Is the playing field fair with foreign companies getting major tax breaks that perhaps allow for greater innovation?
4. Will the lack of a bailout affect national security?

GM CEO, Rick Wagoner, makes his case on youtube:

Would Mr. Wagoner's case get your vote? (I must admit to finding it slightly strange to see such a one on youtube making such a case. What does this say about our current time? For one, it looks like CEOs can no longer sit in glass offices out of view of their customers. This is good. But while there are nearly 4100 views there are no comments at the time of this post. I wonder why?)


Catvibe said...

I think he's right on. I also see how what he's saying fits very neatly into Obama's green energy jobs plan. Thanks for this, a very very good way to put it.

I want a totally green automobile using 0 carbon fuels, that is efficient, adorable, affordable, and made entirely in the USA. The auto companies are already there, why not just get them making the future?
Perhaps to get the materials to be a massive recycling effort of old cars for use of the metals needed. In exchange people would get a trade-in coupon to pay for part of the new car. In this way we would begin the daunting task of getting gas cars off the road and not having mountains of rotting cars with their precious materials just going to waste. There would be so many jobs generated by doing this that it would not be a sharp stick in the eye for the economy.

judith ellis said...

Your suggestions could be one way of lessening our carbon footprints, dependence on foreign oil, and recycling initiatives. Businesses need incentives for change. Currently it appears that that the cost for clean energy is so much more. While it is a necessity, there is still the need to survive right now.

In a Cool Friends interview at Fred Krup talked about a cap and trade system that essentially lessen carbon footprints by putting a "legal limit" and then trading with others around the world. I found it interesting.

Here is a portion of the interview:

"A carbon cap sets the legal limit on the amount of global warming pollution that can be spewed into the sky. The trading mechanism gives companies the flexibility either to make the required reductions, or to buy credits from those who have found a cheaper way to reduce that pollution. Anything that reduces carbon dioxide in the sky, in a scientifically verified way, can earn a tradable credit.

"Basically, we take the current situation—where there's no cost for throwing global warming pollution into the sky—and we turn it on its head. You will have to pay to get a permit to put pollution in the sky. The cap will decline over time, so there will be a steadily decreasing number of permits. If you invent or deploy a technology that reduces your emissions beyond what's required, then you will have a new, profitable commodity to sell in a marketplace. So it aligns our economic incentives with what society needs."

So, here is another option that provides business incentives. It's real possible to avoid carbon footprints over time. But I'm assuming this will probably take time.

David Porter said...

Judith: Rick Wagoner, testifying moments ago, noted that it was not a case of mismanagement but of the global financial meltdown. With all due respect to this guy, GM lost $38.7 BILLION in 2007, lost $2.0 BILLION in 2006, lost $10.6 BILLION in 2005. As I posted earlier, great leadership is available in this country but we do not have it at GM or any of the Big 3 in my estimation. The bailout/loan will be the first tranche of many required by companies that are visionless, leaderless (at the very top), designless, and so on.

judith ellis said...

David - I actually thought of your words here as I listened to Rick Wagoner in this youtube video clip. I also thought of the words of a very good friend and senior executive at one of the Big Three.

I think you may have a very valid point. Call me nostalgic, but I sincerely hope leadership comes to the Big Three soon. Perhaps, forcing them to re-organize and retool by not providing a bailout is percisely what's needed, though I shudder at the thought.

David Porter said...

Judith: An important point is that your friend, and thousands of other leaders may be stuck a few levels below the incompetence. In my experience, once the offending leader is removed, the explosion of energy and possibility is extraordinary! Hopefully, some of the good people at these companies will have the chance to try out their ideas. The unintended consequences to your town and our country are not lost on me if we don't bail them out. I am not sure which "cure" - bankruptcy or bailout will save the industry at this (tipping?)point.

judith ellis said...

David - My friend is brilliant and creative. Your point about leadership is well taken. I am happy to know that our inevitable loss is not lost on others, not to mention its effect beyond our state. Whether given a bailout or allowing for bankruptcy, it looks like both will require necessary changes for sustainability.